Reuters – Private equity firms are being forced to put more money into their struggling companies as the credit crunch has left banks and investors less willing to refinance ailing firms, industry insiders say.
Banks, hedge funds and distressed debt investors used to act as lenders in the refinancing of troubled companies owned by private equity firms that were able to avoid having to put more of their own money to rescue a company.
But now, the global credit turmoil has tightened lending, forcing private equity firms to bail out their own investments.
“Private equity firms have been … very unwilling to admit failures; (interest) rates have been very low so they were able to service the debt despite having a struggling business,” said Andrew Roberts, a partner at law firm Travers Smith.
